Beautiful! Thanks again for a useful reference. I would note that the
distinction Alavi draws here between dadni loans in textile
production and the putting-out system corresponds more or less exactly to
Marx's distinction between productive usury and merchant capital
(Resultate, p. 1023), and thus to the distinction I draw in my recent
response to Mike, and for the same reason: in usury capital, the
capitalist dictates no aspect of the production process; in the putting-out
version of merchant capital, the capitalist dictates it to the extent of
specifying (and supplying) the raw materials that are to be transformed by
the workers.
Gil
> From Hamza Alavi at
> http://ourworld.compuserve.com/homepages/sangat/Colonial.htm
>
>
>The rapid export-led growth of Indian textile production was brought about
>by new weavers entering the trade rather than by changes in technology.
>New entrants needed funds for working capital and to buy the necessary
>equipment. A system of cash advances, called dadni loans, developed
>whereby prospective buyers of cloth would advance the money, in return for
>which, in a sellers market, the lender/buyer would pre-empt delivery of
>the finished goods from the
>weaver. Some scholars have mistakenly taken that system of dadni loans to
>be analogous to the English 'putting out system' which was a precursor of
>the industrial revolution in England. (e.g. Habib, 1969:67-68). Habib and
>other Indian scholars have argued that India was itself on the threshold
>of an industrial capitalist revolution that was thwarted by the impact of
>colonial rule. (cf. Bipan Chandra et. al., 1969 and Habib, 1969) That
>seems to be a mistaken view.
>
>There is an important difference between the Indian system of dadni loans
>and the English putting out system. In the case of dadni loans, the weaver
>was given the loan by the prospective buyer of his product which thereby
>bound him to deliver the finished goods to that buyer. But, given the
>money, the weaver was left to his own devices to procure his raw materials
>and work on them. The buyer-moneylender, the dadni-merchant, did not
>handle the raw materials or equipment and was not involved in the process
>of production in any way. By contrast, in the 'putting out system' the
>entrepreneur took the raw materials
>round to the weavers, from door to door, and collected the finished cloth.
>He soon realised that instead of going from door to door, he could
>simplify his task by bringing all his weavers under one roof. That gave
>rise to the factory system which, in turn, led to mechanisation and a
>transition to the Industrial Revolution. That dynamic was absent given the
>financial organisation of production in India.
>
>After its conquests in India, after 1757, the East India Company,
>operating through its agents called goomasthas, transformed the system of
>dadni loans in a manner that was designed to subordinate the weaver
>totally to the Company's agents. Their object was to pre-empt the weaver's
>services at low prices, as against other competitors, including other
>European operators who were thus elbowed out. The Company developed a
>practice of forcing advances on unwilling weavers. A historian writes that
>before domination by the Company 'They (the weavers) used to manufacture
>their goods freely and without oppression, restrictions, limitations and
>prohibitions. There was no attempt to restrict their goods to the one
>market of the East India Company.' (Sinha, 1961:
>159). Then it all changed.
>